Some professionals 'feasting on carcasses' of firms, judge says
CERTAIN PROFESSIONALS are “feasting on the carcasses” of insolvent and semisolvent companies at a time when many sectors are “taking a hit” and many people have had pay reductions, a High Court judge has said.
Mr Justice Brian McGovern expressed “general concerns” about some professionals appearing to be getting good pickings from troubled sectors when other people who are working just as hard are getting less.
He made the comments after approving “a very large figure” of €509,543 fees, plus outlay and VAT making a total of €647,382, sought for some five months’ work by Luke Charleton of Ernst Young, the chartered accountant appointed as special manager to Newbridge Credit Union on January 13th last. Some €70,977 legal fees were also approved.
The fees cover the period January 13th to June 14th, 2012. As Mr Charleton’s appointment was previously extended for another six months to the end of this year, a separate application for fees for that period will be made later.
The fees will be paid by the 37,000 members of the credit union whose representatives said yesterday they could not consent to such a large sum but were not opposing it. The fees are based on hourly rates descending from €375 an hour at partner level.
The level of fees, the court heard, was agreed to by the Central Bank whose counsel, Brian Kennedy, described Mr Charleton’s work as necessary, proportionate and of a high professional standard. Mr Kennedy also noted the bank had agreed to rates last January that were higher than sought now but those higher rates had been cut in February by the High Court.
Rossa Fanning, for Mr Charleton, said his client’s work was “very significant, complex and novel” and he was the first special manager appointed under new legislation entitling the Central Bank to make such appointments when necessary.
The appointment was sought by the bank with approval of the Minister for Finance arising from uncertainty about the credit union’s financial position.
Mr Justice McGovern said he was told the work done was complex but he wondered was it more complex than a very difficult liquidation or examinership.
Having heard the sides, the judge said he would approve the fees. While he saw “a very large figure”, the bank said this work was necessary and professionally done, it was in a better position to judge and the members were also not opposing the fees.
He would make the order but had general concerns in a context where many sectors are taking a hit but insolvency and other professionals were feasting on the carcasses of troubled companies, the judge said.
Mr Fanning noted higher fee rates agreed between Mr Charleton and the bank last January had been reduced in February by the High Court and the fees for which approval was sought were based on the adjusted rates.
Mr Fanning said there were special circumstances in January as this was a novel and complex assignment.